The Latin American international investment and insurance marketplace is one of the fastest-growing in the world, with the demand for protection of assets amid volatile political and economic backdrops as necessary in 2020 as it ever was.
Across the Latin American region, the need for both products and advice is on the rise.
The inaugural International Investment Latin America Forum will look at where the industry is heading, the challenges and opportunities for the industry in the region, and how advisers, brokers and product providers are adapting to political and regulatory changes.The event will take place on Tuesday, 6th June , Miami.

The inaugural International Investment London Forum will look at where the industry is heading, the challenges and opportunities for the industry in the region, and how advisers, brokers and product providers are adapting to political and regulatory changes.The event will take place on Thursday, 30th April at the South Place Hotel, London.

The 21st International Investment Awards will take place on 8th October 2020, at One Whitehall Place, London. The II Awards are the longest-running event of their kind and last year saw a record number of categories and entries.

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Schroders’ analysis measured two definitions of the Santa Rally: the month of December; and the seven trading days immediately around the Christmas period.

The chart below combines data for the FTSE 100, S&P 500, MSCI World and Eurostoxx indices to show the frequency, in aggregate, with which they rose in each month since 1988.

The analysis clearly indicates that December has been the strongest month, with markets rising 75% of the time. April is the second best performer, with a figure of 70%. This is in contrast to the months of June, August and September which saw falls more often than a rise.

The probability of indices rising each month. Source: Schroders

Looking at a specific index as an example, the most extreme case of monthly disparity was for the MSCI World Index. The index is seen as a broad global equity benchmark which reflects large and mid-cap equity performance across the world. It has finished higher in December on 22 of the last 28 years; 79% of the time. This compares to its June performance when it only rose 36% of the time.

However, it is worth noting that if you’d have invested in the MSCI in 6 of the years that it had fallen in December, you could have made a loss between -4.95% and -0.17% depending on the year.

But why?

There is much speculation on why stockmarkets rise at this time of the year, giving life to the terms “Santa Rally” or “December effect”. One theory is based on investor psychology. There is more goodwill cheer in the markets due to the holiday season putting investors in a positive mood, which drives more buying than selling.
Another view is that fund managers, which account for a substantial part of share ownership, are re-balancing portfolios ahead of the year end.

The real ‘Santa Rally’?

Some analysts say that the true Santa Rally is defined by the last five trading days of the year and the first two days of the new year.

This was a trend identified by Stock Trader’s Almanac publisher Yale Hirsch in 1972. It still carries some weight today, as our research shows.

Indices performances from the fifth to last trading day in December to the second day in January. Source: Schroders

The table above sets out the returns for this seven-day period across a number of indices around the world. It shows the probability of each index rising, along with its average performance. The data stretches back to different starting points.

The UK market appears to show the strongest Santa Rally tendencies. Since 1993, the FTSE 250 has only fallen on one occasion over these seven trading days. The Dow Jones Industrial Average and the S&P 500 also show positive market sentiment at this time of year.

Interestingly, the Nikkei performs markedly worse over this period in comparison to some of its peers. Not only has the index only risen 61% of the time in 33 years, but the average rise was only 0.49%. The highest average rise was 2.29% for the UK’s FTSE 250.

Japan doesn’t celebrate Christmas to the same extent as the West, which could explain why the Nikkei’s performance is less dramatic, if you subscribe to the notion that festive spirit can move markets.

“You shouldn’t expect stockmarket history to repeat itself and you should certainly treat superstitions about the markets with a huge pinch of salt. As a case in point, consider the ‘sell in May’ adage for this year. Those who sold at the FTSE 100’s highest point of the year in May, at 6271 points, would have missed out on an 8% gain by St Ledger’s Day,” James Rainbow, co-head of Schroders UK Intermediary Business, said.

By September 10th this year, the FTSE 100 had reached 6777.

Rainbow added: “Those looking to gamble on Santa spreading his goodwill around the markets again this year do so at their own risk. It really is one for day traders to worry about. A far better approach is to think long-term. Make sure you have a clear investment plan and stick to it.”